Reagan Dunn has a really nice house. Big. Expensive. Showy. (Though judging from the gaudy interior design, not all that gay.) So it’s little wonder a big spender like him opposes a high earners income tax…
LOCAL attorney and income-tax advocate William Gates Sr. is at it again. A few years ago, he led a task force to look into creating an income tax in Washington state. Now he is proposing an initiative to the people to create an income tax this November.
Oh that naughty Gates Sr., he’s “at it again.” Him and his income tax fetish.
Actually, the state Legislature created the bipartisan Washington State Tax Structure Committee back in 2001, composed largely of academics specializing in public finance, tax economics, accounting, and tax law, of which Gates Sr. was elected chair. The committee was charged with reporting back on how well our current tax system worked, and with recommending changes that might better serve the citizens of Washington state in the twenty-first century. The committee was not instructed to look into an income tax, in fact, it was specifically encouraged not to.
The committee determined that our tax structure is “fundamentally inequitable to low- and middle-income people, unfair to many businesses, and subject to sharp fluctuations in revenue.” It further concluded that it was inadequate for the realities of our modern economy, and proposed several major and minor alternatives for addressing these problems, one of which was a flat, broad based income tax.
The Legislature typically did nothing.
That proposal is wrong for Washington because it opens the door to expansion of the tax to all of us in the future, it will kill our economic recovery and it makes our state less competitive to new businesses.
And of course by “all of us,” Dunn is referring to himself, his family and the wealthy in-laws who presumably paid for the “grand entry way” and the rest of Dunn’s shockingly ostentatious McMonstrosity:
Dunn makes two economic assertions, and one bullshit, rhetorical red herring. Whether a high earners income tax would kill our recovery and make our state less competitive, as Dunn asserts, well, neither he nor I are economists, but many of the members of the Tax Structure Committee were, so I urge you to read their findings on such issues. As to the bullshit slippery slope argument that has become a mainstay of the anti-1077 camp, even Dunn can’t manage to keep that one straight:
The Legislature recently went through a long, torturous special session to debate increased taxes and to pass a state budget. Their final budget proposal made modest cuts and made up the difference with increased taxes. Legislators in Olympia didn’t have the guts to raise general taxes. They realized the people of this state have limits on what they are willing to pay to government.
So, um, the fact that the Legislature didn’t “have the guts” to raise general taxes… doesn’t that somewhat rebut Dunn’s argument that the slope to taxing “all of us” is as slippery as the granite countertops in his gourmet kitchen?
Last year, when I spent the session endlessly editorializing on the virtues of a high earners income tax, I heard from several legislators who lectured me on my arrogance. The “people” rejected an income tax by a two to one margin back in 1973, I was told, so who was I to think I know better than the people?
The result of such forward thinking in 2009, Dunn fails to remind you, was an all-cuts budget.
Since the Legislature has maxed out every other tax source, those who want to endlessly increase the size of government need a new one. Gates has now stepped in with his proposal to “tax the rich.” Proponents will argue that it’s just a few thousand rich people. They hope you won’t notice that they have opened the door to a general income tax in the future.
Once Pandora’s box has been opened, how long will it take the Legislature to expand the income tax to you? With the Legislature’s proven appetite for taxes and spending, I would say not very long.
I’ll agree with Dunn that our current tax sources are pretty damn close to being “maxed out,” yet ironically, state and local government spending has been steadily shrinking as a percentage of the state economy for the past couple decades, as has per capita state spending adjusted for inflation according to the IPD for State and Local Governments. In other words, demand for government services is growing faster than the government itself.
Oh, and speaking of appetites:
The fact is, the experience of the past two Legislative sessions, in which budgets have been slashed, is that our elected officials have little appetite for tax hikes, even when that would be the economically responsible policy. Again, as Dunn himself points out, our legislators don’t “have the guts” to impose a general tax increase, and I hardly see how a high earners income tax changes that.
There has never been a tax that legislators have voluntarily cut. The only things we see year after year are incremental increases in the sales tax, property tax, sin taxes and a multitude of fees. Is there any doubt that the $200,000 income-tax cap will slowly creep down to the middle class?
Patently untrue. When Tim Eyman’s I-695 and its massive tax cut was thrown out as unconstitutional, state lawmakers quickly reenacted it legislatively. And when Eyman’s I-747 was recently thrown out after years of starving local budgets, Gov. Chris Gregoire called a special session to reenact that.
Dunn says that “we see year after year” of incremental tax increases, yet the state sales tax rate was last raised in 1983, and the state property tax levy rate has shrunk by a third over the past decade due largely to the limits imposed by the legislatively approved I-747. Meanwhile the state B&O tax on manufacturing has actually been cut twice over the past 15 years.
Yes, sin taxes routinely go up, but that is the nature of volume based excise taxes if they’re to keep up with inflation, and the same holds true for the gas tax, which despite recent (voter approved) increases now sits well below the historical average as a percentage of the cost of a gallon of gas. As for recent local sales and property tax hikes, these have all been approved by voters, often by overwhelming margins, to pay for services and public infrastructure investments we obviously want.
So there’s as little to support Dunn’s fears of middle class tax creep as there is to support his need for a second dining room.
The people passed Initiative 601, limiting state spending to the rate of inflation. When the Legislature found that inconvenient, they changed it. The people passed Initiative 960 requiring a two-thirds vote by the Legislature on new taxes. This past session, the Legislature found that inconvenient and changed it.
And the people elected the legislators who suspended I-601 and I-960, so what exactly is Dunn’s point? That’s how a democratic republic works, and if the people are unhappy with their lawmakers’ actions, they can always vote them out of office. Which perhaps explains why, as Dunn points out, our legislators lack “the guts” to pass a general tax increase like, you know, this one:
Is there any reason to believe state lawmakers will honor the $200,000 income-tax threshold in future sessions?
Yes! Because they don’t “have the guts to raise general taxes!” Those are Dunn’s words, not mine, though I agree with him 100%. And because, as they have proven with I-695 and I-747, our lawmakers don’t just tend to honor the will of the people, they fear it.
Whether the Legislature will be all that quick to adjust the income thresholds upwards with inflation, well that might be a stronger line of attack from critics like Dunn, although regardless, it would take an awfully long time for personal income to rise to the level where the proposed tax would fall on folks without “butler pantries.”
I guess even Dunn understands that defending the middle class against a high earners income tax is a bit of a challenge, so now it’s time to defend the virtues of the butler pantry crowd:
Gates will mask this income tax in the class-warfare mantra of “tax the rich” that we have heard far too much of in recent years.
Yes, in advocating for a slightly less regressive tax structure, Gates, the billionaire father of America’s richest man is engaging in “class warfare.” Gimme fucking break.
What he doesn’t tell you is that most small-business owners report their business income on their personal tax returns. They include money that they plan to put back into their business.
And what Dunn doesn’t tell you is that I-1077 eliminates the B&O tax on 80% of businesses, and lowers it on another 10%. This will be a particularly welcome relief to startups that have yet to turn a profit, but must now pay taxes on their gross revenue.
The income tax will prevent businesses from hiring new workers and expanding their operations. It will effectively stymie our economic recovery and continue the misery of the Great Recession.
He says it, but he provides no evidence to back it up, unlike 300-page Tax Structure Committee report that he so glibly dismisses. What is this… some sort of game?
People must ask themselves how this initiative will attract business to this state and put people back to work?
Um, by making it easier and more affordable to start up a small business because you’ll only have to start paying taxes on it once you’re drawing big profits out of it?
Clearly it will be a drag on our economy and add one more reason why businesses will not relocate here.
Clearly, Dunn doesn’t know what the fuck he’s talking about, as Washington consistently ranks as having one of the best business climates in the nation. And clearly, Dunn would make a lousy spokesman for our region’s economic development efforts.
We have already seen Boeing move its headquarters to Chicago and open a new assembly line in South Carolina. Will creating an income tax attract the jobs that we have already lost to other states?
I dunno. Both Illinois and South Carolina have income taxes, yet Boeing had no qualms about moving there. So will creating a high earners income tax drive jobs away from Washington when we’ll still have one of the most wealthy-friendly tax structures in the nation? Huh? Will it, Reagan? Do you have any answers, or just rhetorical questions? Or is this all just political theater to you?
The citizens of Washington state have repeatedly told our elected state leaders that they don’t want an income tax.
True, voters rejected a broad based income tax by a two to one margin the last time it was on the ballot… way back in 1973. But they approved an income tax with 70% of the vote back in 1932. And if you find that 78 year-old vote unconvincing, well, it’s instructive to point out that 1932 was about as far removed from 1973, as 1973 is removed from today.
Our state leaders don’t have the guts to pass an income tax through the legislative process.
So let’s see… “our state leaders don’t have the guts to pass an income tax” on rich people who live in 6,900 SQFT houses, but they would have the guts to extend the tax to the rest of us. I still don’t get Dunn’s logic.
They hope that you will take the class-warfare bait and pass it for them. Let’s tell them once again that we don’t want an income tax — now or ever.
I think what Dunn and his fellow travelers are really afraid of is that voters will tell legislators the opposite, and that even if I-1077 loses, it will lose by such a small margin that it will forever reshape the debate on tax structure in Washington state. I think what Dunn is really afraid of is that a strong vote in favor of I-1077 will finally give our state leaders some guts to see to it that people like him finally pay their fair share.